FII inflows second highest in 10 years

The year 2013 has confounded pundits and laymen alike.

ET Bureau | Dec 30, 2013, 02.32 PM IST

NEW DELHI: The year 2013 has confounded pundits and laymen alike. The rupee and stock markets recovered from historic lows fairly quickly and stocks went on to touch all-time highs despite a sluggish economy and rising interest rates. The much-feared tapering came and went and Indian markets have so far shrugged it off as just another event.

Doomsday predictions appear to have been postponed to another day.

FII flows, normally sluggish or moderate in December, have also surprised. So far this month, offshore funds have invested Rs14,807 crore, the second highest figure in the past 10 years. With two days remaining in the month, fl ows are likely to top Rs15,000 crore though it is unlikely to reach anywhere close to last year's record of Rs24,039 crore.

"There is buoyancy in terms of foreign fund fl ows into the country, as many foreign investors expect stable and strong government at the centre post general elections next year," said UR Bhat, managing director at Dalton Capital Advisors.

Foreign investment fl ows into the stock market have surged after the global fi nancial crisis as continuous stimulus measures from the US Federal Reserve opened the liquidity taps and sent money gushing into emerging markets. The biggest annual FII investment into India did not happen in 2006 or 2007, the boom years, but in 2010 and 2012. This year seems to end on a high again but all bets are off if the pace of tapering is stepped up and investors get jittery about emerging market bubbles.

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